How to Read a Balance Sheet Simply

Published by StockScore Editorial • Reading time: 4 mins

A Balance Sheet provides a snapshot of a company's financial position at a specific point in time, listing its assets, liabilities, and shareholders' equity.

The Golden Balance Sheet Equation

            Assets = Liabilities + Shareholders' Equity
          

Assets are what the company owns (cash, buildings, machinery, inventory). Liabilities are what it owes (bank loans, trade payables, long-term bonds). Shareholders' equity is the net worth of the business owned by shareholders.